Broker Fiona in Massachusetts represents a seller. The buyer's agent, also a Massachusetts licensee, collects a $12,000 earnest money deposit from the buyer. The purchase and sale agreement is silent as to which broker should hold the deposit in escrow. The buyer's agent wants to hold the deposit in her own broker's trust account, but Fiona insists the deposit must be held in her trust account since she represents the seller. Under Massachusetts practice and regulations, which statement best describes how this should be resolved?
Correct Answer
C) When the purchase and sale agreement is silent, the parties should negotiate and agree in writing on which broker will serve as escrow agent, or the matter should be addressed by amending the agreement
Under Massachusetts practice and 254 CMR 3.00, there is no automatic rule that either the listing broker or the buyer's broker must hold the escrow when the purchase and sale agreement is silent on the matter. The escrow holder is determined by agreement of the parties. When the agreement is silent, the parties (through their agents) should negotiate and agree in writing on who will serve as escrow agent, or the agreement should be amended to specify this. Neither broker has an automatic superior right to hold the escrow solely based on who they represent.
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Related Topics & Key Terms
Key Terms:
Related Concepts
A trust account, also called an escrow account, is a separate bank account maintained by a broker to hold funds belonging to others, such as earnest money deposits, security deposits, or other client funds.
Advertising regulations govern how real estate licensees may market properties and services, requiring truthful, non-deceptive advertising that includes proper identification of the brokerage.
Antitrust violations in real estate occur when competing brokerages or agents engage in practices that restrain trade, reduce competition, or harm consumers through collusion. These violations are governed by the Sherman Antitrust Act and can result in severe penalties.
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